"We want investors and businesses to play their part in greening our economy and transitioning to net zero, so it’s crucial we have a clear common definition of what green means."
A new independent expert group has been established to advise on standards for green investment.
The Green Technical Advisory Group (GTAG) will oversee the Government’s delivery of a “Green Taxonomy” – a common framework setting the bar for investments that can be defined as environmentally sustainable.
The Green Taxonomy will help clamp down on 'greenwashing' – unsubstantiated or exaggerated claims that an investment is environmentally friendly – and make it easier for investors and consumers to understand how a firm is impacting the environment.
With hundreds of new sustainable investment funds coming to market each year and sales to UK retail investors tripling from 2019 to 2020, consumers and investors of all sizes will be able to make more informed decisions, and businesses will be supported as they plan to transition to net zero.
The Green Technical Advisory Group (GTAG) will provide independent, non-binding advice to the Government on developing and implementing a green taxonomy in the UK context.
GTAG will be chaired by the Green Finance Institute and made up of financial and business stakeholders, taxonomy and data experts, and subject matter experts drawn from academia, NGOs, the Environment Agency and the Committee on Climate Change.
John Glen, economic secretary to the Treasury, said: "We want investors and businesses to play their part in greening our economy and transitioning to net zero, so it’s crucial we have a clear common definition of what green means.
"A UK green taxonomy will provide better data on the environmental impact of firms, supporting investors, businesses and consumers to make green financial decisions and accelerating the transition to net zero.
"I look forward to receiving the advice of the expert Green Technical Advisory Group as we put in place a rigorous taxonomy that works for the UK and sets a high standard globally."
Ingrid Holmes, executive director of Green Finance Institute, commented: "The GTAG will play a key role, advising Government on implementing a robust, science-based Taxonomy that is adapted to the specific needs of the UK context, and works for all stakeholders.
"We’re delighted to chair the GTAG, and to welcome all 18 members onboard, all of whom have a demonstrable interest and/or track record of being engaged on the issue of developing and using taxonomies, and the practicality of applying a taxonomy in a UK-specific context."
Ian Bradbury, CTO for financial services at Fujitsu UK & Ireland, added: “The call for the financial services sector to reduce its emissions and contributions to fossil fuel companies has been an ongoing conversation, with little concrete action taken. However, today’s news is a step in the right direction to ensure that the industry puts their money where their mouth is.
“As financial organisations strive to provide great customer experiences, the emphasis must also be on how they align their services with customers’ ethical and social beliefs. What’s more, it’s an opportunity to position the business as a trusted pillar of society; empty promises on CSR are no longer enough. This is something Natwest recently demonstrated with its ‘green mortgage’, offering individuals who purchase an energy efficient property a preferential interest rate on their home loan.
“Undoubtedly, environmental concerns resonate with large proportions of consumers who continue to champion climate change. IBM recently found that 90% of consumers feel that the Covid-19 pandemic affected their views on environmental sustainability. Now, the financial services industry need to take these concerns as a serious priority, particularly in order to fulfil the demand and attract the socially-aware next generation of banking customers.”